JUNE 7, 2005

GM faces up to its problems

General Motors is biting the bullet and slashing 25,000 jobs over the next three and a half years. The company is fighting to reduce its losses and to mount a stronger defence as Toyota challenges GM for the role of being the world's top car manufacturer. The danger is that the unions in the US will try to stop the changes and plunge the company into even deeper trouble.

The 25,000 jobs amount to around 17% of the workforce. The aim of the cuts is to try to cut production capacity so that the company is not manufacturing more vehicles than it can sell.

Shares rose nearly two percent following the announcement.

GM is also planning to target more global sales and production in the future, moving away from the expensive factories and workforce in the US.